nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2009‒04‒18
seven papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Revisiting Strategic versus Non-Strategic Cooperation By Reuben, Ernesto; Suetens, Sigrid
  2. Does Innovation Help the Good or the Poor Performing Firms? By Jože P. Damijan; Crt Kostevc; Matija Rojec
  3. The global entrepreneurship index (GEINDEX) By Zoltán J. Ács; László Szerb
  4. Does Corporate Governance Matter in Competitive Industries? By Xavier Giroud; Holger M. Mueller
  5. Measurement of the Consumer Benefit of Competition in Retail Outlets By MATSUURA Toshiyuki; SUNADA Mitsuru
  6. Regional Trade Integration and Multinational Firm Strategies By Pol Antràs; C. Fritz Foley
  7. Vertical Foreign Direct Investment: Evidence from Japanese and U.S. Multinational Enterprises By Kiyoyasu Tanaka

  1. By: Reuben, Ernesto (Northwestern University); Suetens, Sigrid (Tilburg University)
    Abstract: We use a novel experimental design to disentangle strategically- and non-strategically-motivated cooperation. By using contingent responses in a repeated sequential prisoners' dilemma with a known probabilistic end, we differentiate end-game behavior from continuation behavior within individuals while controlling for expectations. This design allows us to determine the extent to which strategically-cooperating individuals are responsible for the so-called end-game effect. Experiments with two different subject pools indicate that the most common motive for cooperation in repeated games is strategic and that the extent to which end-game effects are driven by strategically-cooperating individuals depends on the profitability of cooperation.
    Keywords: reputation building, strong reciprocity, conditional cooperation, strategic cooperation
    JEL: C91 D01 D74
    Date: 2009–04
  2. By: Jože P. Damijan; Crt Kostevc; Matija Rojec
    Abstract: Using firm-level innovation data for a large sample of Slovenian firms in the period 1996-2002, the paper finds surprising results that innovation is not benefitting all firms. We find that only manufacturing firms with below average productivity growth (the lowest four deciles) are likely to experience significant benefits from successful innovation, while faster growing firms do not extract any additional benefits from innovation. This evidence demonstrates how innovation can affect the observed convergence of firms in terms of productivity in the manufacturing sector.
    Keywords: research and development, innovation, knowledge spillovers, productivity growth
    JEL: D24
    Date: 2009
  3. By: Zoltán J. Ács (George Mason University); László Szerb (University of Pécs)
    Abstract: This paper constructs a Global Entrepreneurship Index (GEINDEX) that captures the contextual feature of entrepreneurship across countries. We find the relationship between entrepreneurship and economic development to be mildly S-shaped not U-shaped or L-shaped. Our findings suggest moving away from simple measures of entrepreneurship across countries illustrating a U-shaped or L-shaped relationship to more complex measures, which are positively related to economic development. Implications for public policy suggest that institutions need to be strengthened before entrepreneurial resource can be deployed to drive innovation.
    Keywords: Entrepreneurship, Development, Stages of Growth, Globalization, Innovation, Index, Knowledge, Institutions
    JEL: L26 O1 O3
    Date: 2009–04–14
  4. By: Xavier Giroud; Holger M. Mueller
    Abstract: By reducing the threat of a hostile takeover, business combination (BC) laws weaken corporate governance and increase the opportunity for managerial slack. Consistent with the notion that competition mitigates managerial slack, we find that while firms in non-competitive industries experience a significant drop in operating performance after the laws' passage, firms in competitive industries experience no significant effect. When we examine which agency problem competition mitigates, we find evidence in support of a "quiet-life" hypothesis. Input costs, wages, and overhead costs all increase after the laws' passage, and only so in non-competitive industries. Similarly, when we conduct event studies around the dates of the first newspaper reports about the BC laws, we find that while firms in non-competitive industries experience a significant stock price decline, firms in competitive industries experience a small and insignificant stock price impact.
    JEL: G3
    Date: 2009–04
  5. By: MATSUURA Toshiyuki; SUNADA Mitsuru
    Abstract: In this paper, we estimate the consumer benefits of competition in the retail industry. In our analysis, we incorporated the service quality of retail outlets as outputs. In Japan, in the process of the deregulation of entry restriction on large-scale retail stores, specialty supermarkets have increased their market share with a low price strategy. At the same time, despite their high prices, convenience stores have increased their market share through 1990s. We demonstrate changes in market share for each retail format are explained by the changes in each formats respective service quality.
    Date: 2009–04
  6. By: Pol Antràs; C. Fritz Foley
    Abstract: This paper analyzes the effects of the formation of a regional trade agreement on the level and nature of multinational firm activity. We examine aggregate data that captures the response of U.S. multinational firms to the formation of the ASEAN free trade agreement. Observed patterns guide the development of a model in which heterogeneous firms from a source country decide how to serve two foreign markets. Following a reduction in tariffs on trade between the two foreign countries, the model predicts growth in the number of source-country firms engaging in foreign direct investment, growth in the size of affiliates that are active in reforming countries both before and after the tariff reduction, and an increase in the extent to which the sales of affiliates in reforming countries are directed towards other reforming countries. Analysis of firm-level responses to the creation of the ASEAN free trade agreement yields results that are consistent with these predictions.
    JEL: F13 F21 F23
    Date: 2009–04
  7. By: Kiyoyasu Tanaka
    Abstract: Foreign direct investment (FDI) has rapidly increased in developing countries since the 1990s, but formal evidence for vertical FDI has been surprisingly mixed. This paper empirically reconsiders the factor-proportions hypothesis by exploring the role of host countryfs relative skill endowments in offshore production of multinational enterprises (MNEs). Using panel data on sales of foreign affiliates by Japanese and U.S. MNEs in the 1990s, I find that relative skill abundance has a large negative impact on Japanese affiliate sales, but little effects on U.S. affiliate sales. Robust to a wide variety of sensitivity checks, the results strongly support vertical FDI in the case of Japanese MNEs, but not U.S. MNEs. Because the dominant view in favor of horizontal FDI against vertical FDI in the previous literature results primarily from U.S. data, I empirically demonstrate that data sources on MNEs could partly explain weak evidence for vertical FDI.
    Keywords: Multinational firms, foreign direct investment, skill endowments
    JEL: F21 F23
    Date: 2009–03

This nep-cse issue is ©2009 by Joao Jose de Matos Ferreira. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.